Central America
National State of Emergency
Nicaragua has decreed a national state of emergency. There follows the official text and a reflection on the reason for this extraordinary measure.
Envío team
Causes of the Action (taken from the official communiqué of 9/9/81)
1)Crisis in the Third World
“The countries of the Third World are being affected by an acute crisis, caused by the growing injustice in the economic exchange with the rich and developed countries. While the products that we have to import become more expensive, the prices we receive for our exports decrease”.
2)Crisis in Central America
“This crisis strikes a blow at the Central American area and provokes a grave shortage of foreign exchange in the countries of the region. Central America also suffers from low growth rates, both in economic growth and in investment, and from severe inflationary tendencies”.
3)Crisis in Nicaragua
“In respect to Nicaragua, we have to add to the external conditions, which the world economy imposes upon us, the situation inherited from the Somoza dictatorship: sacking, destruction and ruin, and paralysis of the productive apparatus; increase in the external debt; devaluation and destruction of the financial system. For the Revolutionary Government these two years have meant great efforts to reconstruct the country and reorient its economy toward a new model of development, congruent with the project of social change and justice proposed by the Popular Sandinista Revolution. In spite of the advances achieved, the remaining difficulties are enormous and it is necessary that we confront them in a realistic manner. We are not living in a state of normality in Nicaragua”.
“To the inherited difficulties, we should add other factors that have weakened the means of production and investment, such as the decapitalization practices of some businessmen that have moved their business activities out of the country; the lack of state control in the parallel market of foreign exchange, which has grown to intolerable levels; fraud in payments of fiscal and customs taxes; growth of public expenditure and excessive state bureaucracy; and on the other hand, seizures of factories, labor stoppages, and lack of work discipline which has reduced the means of national production…”
SOME GENERAL REFLECTIONS ABOUT THE SOCIAL AND ECONOMIC STATE OF EMERGENCYIn examining the official documents of the State of Emergency, we have formed some impressions which will be corroborated or corrected as time goes on and the measures are implemented.
a) the socio-economic State of Emergency is the institutional and political means which will permit the government to confront the grave crisis that the country faces. It attempts, as well, to be an instrument which assures strict order and control in public administration and productive stability.
b) The fiscal and financial measures announced as part of the State of Emergency do not put in jeopardy the sovereignty of the country and its economic independence. They try to insure that the crisis be confronted collectively by the entire Nicaraguan nation, without the solution falling on only one sector which has to bear the brunt of the whole sacrifice.
c) The State of Emergency, set at one year, is a temporary measure. It seems a reasonable time in which to create certain economic conditions to reactivate the productive structure of the country. It would be a mistake to think that the crisis inherited over the past several decades can be resolved in one year. Therefore, the State of Emergency is a first stage in a larger and more global economic recuperation.
THE EMERGENCY LAW OF NICARAGUA AND ITS DIFFERENCE FROM OTHER EMERGENCY LAWS OF THE CONTINENTThere are emergency laws in some of the Latin American dictatorships. Here in Nicaragua, during the time of Somoza, there were emergency laws. There are qualitative differences between the situation here and the decrees issued by Somoza or other Latin American dictators.
This law is part of the plan of national unity to resolve the national crisis. No social sector has to pay a higher price than another. Other laws of Latin American dictators are oriented so that the poorest sectors have to pay the whole cost involved.
CENTRAL AMERICA: DIFFERENT SOLUTIONS TO THE SAME CRISISThe same day that the Nicaraguan government announced the National State of Emergency, the Honduran government announced a drastic budget cut of close to $ 3 million, as an answer to its crisis. Days earlier, Costa Rica, which is being economically strangled by its debts, has severely reduced its imports in order to confront its crisis. Guatemala and El Salvador are also faced with this critical reality.
All of Central America saw an increase, between 1978 and 1980, in their foreign debt of 63%, while the increase in their Gross Domestic Product was only 3%.
But in the face of this grave situation in Central America (and in the Third World in general) the answers to the crisis are different. In Central America the majority of the governments resort to incredible repression against the poorest sectors, upon whom the burden of the crisis falls. It is worth noting that the negative economic growth of 9.5% in El Salvador in 1980 was accompanied by a blood bath (that continues today) against the people. Thousands of dead and disappeared are “the form of resolving the crisis” in Guatemala and El Salvador.
In Nicaragua, there is a qualitative difference in the form in which the government is trying to resolve the crisis. Trying to maintain its concept of economic independence, the State of Emergency tries to assure:
1) That workers, campesinos and small producers increase productivity.
2) That public employees and functionaries develop a conscience of efficiency.
3) That patriotic businessmen observe the laws and work productively toward economic recovery.
With a feeling of unity, each sector in the country is being asked to contribute.
EFFORTS OF THE GOVERNMENT AND THE FSLN TO EXPLAIN THE SCOPE OF THE CRISIS AND THE STATE OF EMERGENCYAn intense dialogue by the government leaders with the Nicaraguan people was initiated on September 9 (the date on which the State of Emergency was announced). This demonstrated the government’s premise that comprehension of the seriousness of the crisis by everyone is the first guarantee of the success of the State of Emergency measures.
On September 9, while the Government Junta announced the measures, Comandante Luis Carrión explained the scope of these decisions in a National Assembly of the Sandinista Defense Committees. In the following days, there was a great number of gatherings, meetings, and assemblies in neighborhood committees, teacher-formation workshops in the Popular Education Program, etc. On September 22, various directors of the FSLN visited the 18 principal factories of Managua, explaining the significance of the measures. In commemorative gatherings, such as such as that of Pancasán, the comandantes and directors focused their speeches on this new situation. The press gave a great deal of coverage to the dialogue, and practically every Nicaragua received (and continues to receive as the dialogue goes on) an explanation of the situation in his/her place of work or study, or in the mass organizations to which he/she belongs.
INITIAL RESPONSES FROM SOME SECTORSCOSEP (The Superior Council of Private Business), through its president, Enrique Dreyfus, said in Barricada on September 11, “The measures are definitively positive, as antibiotics are for someone sick, but vitamins are also necessary and it is necessary to say that our potential is immense. The zopilote (Nicaraguan bird) is sick but we should not bury it since it is young and still has a lot of life”.
A week later, there began to be a change of position within COSEP and they said, “the state of emergency could be harmful to the economic reactivation process. They are not measures undertaken to initiate increase in production and their only utility is to administer the shortage”. According to COSEP “the law threatens private property”, although they did not specify any particular aspect of the law that they found threatening.
Alfonso Robelo, director of the opposition party MDN (Nicaraguan Democratic Movement) said, “my party agrees with the measures and intentions”. He denied that his party had ever acted against the measures at the same time that he accused the FSLN of having committed numerous violations of the measures which they were now establishing. He also suggested that closer relations with the United States would be the best manner of improving the Nicaraguan economy. (La Prensa, Sept. 22, 1981).
At the church level, as happened with the Agrarian Reform Law, there was no statement from the hierarchy. Christian youth groups, comunidades de base, and Christian students did express their support of the actions taken.
The first reactions of the popular organizations, the political parties which support the Frente Sandinista, the Rural Workers Association, and the Sandinista Workers Central also expressed positive reactions to the State of Emergency measures. The same Sandinista Central, without criticizing the temporary suspension of the right to strike, approved the content of the new measures which would indicate a political understanding by the union leaders that the crisis situation in Nicaragua justifies certain concessions such as the right to strike. The unions not aligned with the Sandinistas have not made any public statements, either in favor of or in opposition to the measures. The problem of the right to strike needs to be treated more in depth, but it appears that in Nicaragua at the moment there is a tendency to increase the responsibility of the workers for production (Agrarian Reform Law, Decapitalization Law).
The establishment of controls on the parallel market opens certain questions with respect to what will happen in the future in this area. The official exchange rate in Nicaragua is 10 córdobas per dollar. For some time, there has existed a parallel market where the dollar has fluctuated between 25 and 30 córdobas per dollar. This is not called a “black market” because it has operated legally.
The parallel market will continue to exist. The rate of exchange will continue to be regulated by supply and demand, but there will be official exchange offices established which will be more rigidly controlled by the Central Bank. The money-changers will no longer operate on the streets.
The amount of money which can be changed on this market and the purposes for which one can buy dollars will also be controlled in order to prevent the decapitalization which has plagued the country and in order also to channel the existing dollars toward those areas which are aiding the national economy. It remains to be seen whether these new controls will lead to the emergence of a “black” market as an alternative to the parallel market.
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